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In Class Action Against Apple and Others, Concerns From the Judge

By David Streitfeld June 27, 2014 7:00 amJune 27, 2014 7:00 am

Photo

Michael Devine, one of the five named plaintiffs in a class-action hiring collusion case, thought that $324 million in damages was not an adequate punishment for the companies involved.Credit Stuart Isett for The New York Times

Silicon Valley, at least according to myth, is all about risking everything on an idea. You seize a dream and do not let it go until you make it or they come and repossess your desk. Failure in the valley is admired. It makes you smarter, tougher, more likely to succeed next time.

Silicon Valley lawyers, on the other hand, seem to be more like the rest of us: risk averse. Confronted with the choice between $324 million lying on the table and billions just possibly within reach, they go for the sure thing.

Michael Devine, one of the four named plaintiffs in the case, thought that $324 million was not enough to adequately punish the companies, and filed a memorandum to that effect with Lucy H. Koh, the United States District Court judge in San Jose, Calif., who has been hearing the case. Under the projected settlement, class members will get a few thousand dollars each.

Judge Koh could rule at any moment, either giving preliminary approval to the settlement, rejecting it or encouraging the parties to go back to the settlement table. Clues to her state of mind were displayed in a hearing last week, according to a transcript. She was clearly peeved.

“I just have concerns about whether this is really fair to the class,” she said. She noted the rich trove of incriminating material from executives in the case. A jury, she noted, “would have found these documents very significant and pretty compelling.”

And she said she probably would have allowed evidence that there was a Justice Department investigation into the hiring practices at the companies, which would have bolstered the case.

Google and Apple have more than $200 billion in the bank. Judge Koh pointed out to a Google lawyer that the company’s image and good will could suffer if the case went to trial. “It would have had a lot of cost other than just strictly monetary,” she said.

“I’m not denying that one bit,” said the lawyer, Robert A. Van Nest.

Kelly Dermody, representing the class members, defended the settlement, saying a victory at trial was no sure thing. “If I personally believed that I could go to trial right now and do better than what we’re giving to Your Honor today, I would do it. I would do it a hundred times in a row,” Ms. Dermody said.

But the judge was not buying it. “You know, I wish you had told me how weak your case was” earlier in the process, she said. “That would have been helpful information.” She added that, “I was certainly hearing a different tune” from the plaintiffs during the previous motions in this case.

The plaintiffs had originally argued they should get $3 billion in damages, which would have been automatically trebled.

“You’re now almost a victim of your own success,” the judge said. “You’re the ones that put out the $3 billion number. That’s what has gotten everyone’s expectations so high.”

Mr. Devine declined to comment this week, but his new lawyer, Daniel C. Girard of Girard Gibbs, said his client “was pleased to have his concerns heard in such detail by Judge Koh.”

The plaintiffs’ lawyers are asking for $81 million in fees, about a quarter of the settlement. Judge Koh had concerns about that, too. She asked Ms. Dermody, “Why should that go to you instead of the class?”

Correction: June 27, 2014An earlier version of this post incorrectly characterized the fees being requested by the plaintiffs' lawyers. The amount, $81 million, is about a quarter of the settlement, not a third.